Many people are in the situation where their home is actually worth quite a bit less than what they purchased it for. When they bought the home, they were told that refinancing it would be no problem and that they did not have to worry about the bubble bursting in that particular market. This type of thinking is what is causing the foreclosure crisis throughout the Central Valley of California and other parts of the nation. Now that the President has passed a law eliminating the taxation of short sales as income, a short sale is a very viable option if you are selling a home and can't afford your payments.
The key thing with a short sale is to be proactive. Contact your company as soon as you realize that you cannot continue to afford the payments and have them send you a short sale packet. In addition, you are going to need a Realtor to complete this transaction. In order to do a short sale transaction, you must have an arm's length transaction in California, meaning that it cannot be a For Sale By Owner transaction, nor can you sell your own property.
Once you have got the packet and chosen a Realtor, then you must have them send a notice of authorization for the agent and the escrow officers to be able to contact the bank regarding your situation. Without this, the bank will refuse to talk to anyone but the borrower.
Then be prepared for the long haul. It can take 30-90 days for banks to approve or disapprove of a short sale, with most ranging between 45-60 days. In order for them to approve it they need both a listing contract (the seller) and a purchase contract (the buyer). Without these, the bank will not comment about the status of your short sale.
Once the short sale is approved, most banks want a very quick closing, usually in 15 days. So be prepared to move quick. If you are unprepared you could miss the window of opportunity to sell this property. Please remember as an owner, you will not see any proceeds from the property, and it could act as a foreclosure on your credit report. Some things to consider before doing a short sale.
If you have any questions regarding short sales or anything else regarding real estate, I would be more than happy to help you.
ERA Village ONE RE